Bitcoin(redirected from Bit coin)
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Bitcoin:see virtual currencyvirtual currency,
a means of payment that is electronically created and stored, more specifically an unregulated electronic medium of exchange that operates like a currency but is created and controlled by computer software; also called digital currency.
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BitcoinA peer-to-peer digital currency and electronic payment system introduced by an anonymous person with the alias Satoshi Nakamoto in January 2009. Although thousands of merchants on both the Web and dark Web accept Bitcoin as payment, many people are buying and holding strictly for investment, and its value has skyrocketed since inception. Naysayers claim Bitcoin is a Ponzi scheme, but proponents predict one coin will be worth $500,000 in the future. Bitcoin has also spawned hundreds of other digital currencies in what has become a technology craze. For a complete list, visit www.coinmarketcap.com. See dark Web.
A Distributed Accounting System
There is no central repository for Bitcoin. It is a "decentralized virtual currency" that is not controlled by any government. Also known as a "cryptocurrency," transactions are encrypted to keep the identities of the parties anonymous. However, the transaction itself is visible because it is published in a constantly expanding public ledger known as the "blockchain," which is duplicated in thousands of Bitcoin nodes (computers) throughout the Internet. Anyone is able to see the transfer of Bitcoins starting with the first ever transaction, but the from: and to: parties are kept anonymous. See cryptocurrency, public key cryptography and blockchain.
Due to its blockchain architecture, Bitcoin transactions cannot be altered or reversed, and this results in a system that is trustworthy. As a result, hundreds of cryptocurrencies as well as other kinds of blockchain-based transactions are emerging worldwide. They are especially popular in countries that do not trust their financial institutions. See Ethereum.
Anyone Can Buy, Transfer and Sell Bitcoins
Users access their Bitcoins from a digital wallet they manage in their computer, mobile device or through an online service. The wallet is used to pay for merchandise or transfer coins to another party. Once a wallet is established, coins are bought with and sold for dollars, Euros and other national currencies at an online exchange or physical ATM, both of which take a commission (see Bitcoin wallet, Bitcoin exchange and Bitcoin ATM).
The value of a Bitcoin fluctuates on various cryptocurrency exchanges like a share of stock, but with even greater volatility. For example, on January 1, 2013, one Bitcoin was worth USD $13. By the end of 2015, its price was $422 per coin but two years later reached $19,186 only to drop to $7,007 within a few weeks. In 2017, Bitcoin split into three versions, and the original Bitcoin was enhanced for performance (see Bitcoin Cash, Bitcoin Gold and SegWit).
Bitcoins Are Mined!
The strangest thing about Bitcoins is the way they come into existence. Bitcoin "miners" compete with each other to update the blockchain with new transactions, and they are rewarded with Bitcoins that are created "out of the blue" for their own account. For details, see Bitcoin mining.
Traction - Then Hacking
In late 2010, Bitcoins were becoming popular in the open source and underground communities. By mid-2011, there was an attack on the Japan-based Mt. Gox exchange, and a hacker extracted 25,000 Bitcoins worth nearly $500,000. In early 2014, Mt. Gox filed for bankruptcy, because it was revealed that the exchange concealed the loss of hundreds of thousands of Bitcoins.
Who Is Satoshi Nakamoto?
Nakamoto's true identity was never disclosed; however, articles attributed to him are written in flawless English. Australian computer scientist Craig Wright claimed to be him, but that was disputed. Although he denies it, cryptography pioneer Nick Szabo, who designed a decentralized digital currency in the late 1990s, has been hailed as Nakamoto (NS initials possibly reversed??). To commemorate the developer, fractions of Bitcoins are called "Satoshis." One Satoshi is equal to 0.00000001 Bitcoin.
Government Printing vs. Bitcoin Generation
When people argue that Bitcoins are no less valid than the U.S. dollar, there is a distinction. Bitcoins have nothing to back them up but the faith of the people using them. Although the same might be said of U.S. currency, the United States has the IRS and other federal agencies to ensure that people pay taxes. Nevertheless, proponents claim that Bitcoin and other blockchain-based platforms are going to revolutionize all kinds of transactions worldwide.
In 2013, Germany recognized Bitcoins as a financial instrument, and the U.S. Department of Justice said Bitcoins were a valid means of exchange even though members of Congress had previously tried to invalidate them. Senior officials in both the Bank of Canada and Bank of England have proposed the possibility of a blockchain-based digital currency for their respective countries. For more information, visit www.bitcoin.org, www.bitcoincharts.com, www.blockchain.info and http://en.bitcoin.it. See BIP, Bitcoin transaction, Bitcoin mining, blockchain, Ethereum, Silk Road, Web payments service and digital wallet.